Home Value Appreciation Exceeds Five Percent for Sixth Consecutive Month

Home values continued to climb in April, increasing 0.5 percent from March to a Zillow Home Value Index of $158,300, according to the April Zillow Real Estate Market Reports. Home values were up 5.2 percent year-over-year, marking the sixth consecutive month of annual home value appreciation at or above five percent. The last time national home values were at this level was in June 2004.
A majority (55 percent) of the 365 metros covered saw home values climb in April from March. Of the 30 largest metro areas covered, Sacramento experienced the largest monthly increase, with home values rising 3.4 percent. Other large metro areas with notable monthly increases include Las Vegas (3 percent) and San Francisco (2.8 percent).
For the 12-month period from April 2013 through April 2014, U.S. home values are expected to rise 4 percent to approximately $164,648, according to the Zillow Home Value Forecast. This is a decrease from the 5.2 percent annual rate of appreciation recorded between April 2012 and April 2013, and reflects anticipated shifts in supply and demand in some of the nation's hard-hit markets.
"April marks the sixth straight month of annual home value appreciation of 5 percent or above, the longest such streak since the height of the bubble in 2006. In the short-term, this has been welcome news for homeowners. But in the long-term, this cannot be sustained, and consumers entering the market today should not expect this kind of appreciation to last," said Zillow Chief Economist Dr. Stan Humphries. "Overall, we expect home value appreciation to moderate as more supply comes on line over the next year, but in some areas, runaway home value appreciation, combined with expected interest rate hikes in coming years, runs a real risk of pricing out many potential buyers. Home values in these areas will have to flatten or even fall to come back in line."
Of the nation's 30 largest metro areas covered by Zillow, 29 experienced year-over-year home value increases, with more than half up by double-digit percentages. Major markets where home values increased the most over the past year include Phoenix (25.5 percent), Sacramento, Calif. (25.4 percent), San Jose, Calif. (25.2 percent), San Francisco (24.8 percent) and Las Vegas (23 percent). Chicago was the only metro area in the top 30 where home values declined year-over-year.
National rents declined slightly in April compared with March, down 0.2 percent to a Zillow Rent Index of $1,288. Year-over-year, national rents were up 3.9 percent in April.
The number of completed home foreclosures in April fell to 4.81 homes foreclosed out of every 10,000 homes nationwide, down 0.7 homes per 10,000 from March and 2.1 homes per 10,000 from April 2012. This is the lowest monthly level of foreclosure liquidations since September 2007. Foreclosure re-sales represented 12 percent of homes sold in April, down 1 percentage point from March and 4 percentage points from April 2012.